Flaws in Contractor Support for the Department of Labor's Black Lung Program

PLRD-82-43: Published: Apr 2, 1982. Publicly Released: Apr 2, 1982.

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Pursuant to a congressional request, GAO examined the procurement process of the Department of Labor's contract with Electronic Data Systems Corporation as it pertained to the Black Lung Program and commented on the management of the Program.

Although official contract files appear to show competition in Labor's award of the contract to operate a system for paying black lung bills and benefits, GAO uncovered facts and circumstances which indicated that the competition may have lacked substance: the chairman of the technical evaluation panel had a negative predisposition toward one of the prospective contractors; two of the three prospective contractors became one company shortly after the contract award; and, during negotiations, the original request for proposals was amended which resulted in reducing competition by compressing the differences in the proposed prices and giving more importance to technical aspects. Labor engaged in inadequate contract administration practices and procedures. In a few instances, Labor permitted practices that left the government vulnerable to abuse. GAO observed a number of management problems, such as: a lack of coordination; backlogs of unpaid bills; duplicate payments; and unresolved issues prior to awarding a contract for a new automated payment system.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Labor should institute controls to ensure that: (1) when an offeror increases its cost proposal, the contracting officer determines the reasons for the increase and assures that commensurate value is obtained; (2) any reservations held by Labor officials regarding the responsiveness or qualifications of prospective contractors be resolved in accordance with Federal Procurement Regulations; and (3) contract options, when appropriate, are exercised on time.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Labor should direct the Inspector General to determine if the problems that have occurred on this contract are widespread. If they are, prompt corrective action should be taken to reduce Labor's vulnerability to potential waste and abuse. One course of action that should be considered is the establishment of an organization devoted to contract administration on other than an ad hoc basis.

    Agency Affected: Department of Labor

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Labor, before a contract for a new automated payment system is awarded, should: (1) develop a clear, concise description of what the contractor will be required to do; (2) purify the Black Lung Program's database so that the information provided to the contractor is accurate, complete, and current; and (3) establish standards so that the contracting parties have a clear understanding of what levels constitute acceptable performance.

    Agency Affected: Department of Labor

  4. Status: Closed - Not Implemented

    Comments: Labor believes that current mission and function statements serve the purpose of defining the responsibility and authority for each entity. The Employment Standards Administration has made and is continuing to make serious efforts to improve the operational interface of these entities. A reorganization was recently completed of the Black Lung Program which will improve contract administration.

    Recommendation: The Secretary of Labor should clearly define the authority and responsibility of each of the organizations within the Employment Standards Administration that affect the Black Lung Program to provide for a quick resolution of any disputes and to ensure effective coordination.

    Agency Affected: Department of Labor

 

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